Jurisdiction - Australia
Reports and Analysis
Australia – Removal Of Ban On Payment Of Stamping Fees For REIT IPOs.

5 February, 2014


Legal News & Analysis – Asia Pacific – Australia – Capital Markets




  • The Government has released exposure draft legislation and regulations for public consultation to implement reforms to the Future of Financial Advice (FoFA) laws.
  • ASIC issued a press release on 20 December 2013 stating that it would take a facilitative approach to the FoFA reforms until mid 2014 during which period its focus will be on education and assistance and it will not seek to enforce the specific provisions the Government has indicated it is planning to repeal.
  • The reforms are designed to reduce the burden on industry and pressures on the cost of advice to consumers.
  • One of the proposed reforms removes the ban on investment entities (including REITs) paying stamping fees to brokers in respect of capital raising.
  • The consultation process is short closing on 19 February 2014.



Divisions 4 and 5 of Part 7.7A of the Corporations Act 2001(Corporations Act) prohibit certain activities with respect to “conflicted remuneration”. “Conflicted remuneration” is defined as any benefit given to an Australian Financial Services (AFS) licensee, or its representative, who provides financial product advice to retail clients that, because of the nature of the benefit or the circumstances in which it is given, could reasonably be expected to influence:


  • the choice of financial product recommended to clients by the AFS licensee or representative; or
  • the financial product advice given to clients by the AFS licensee or representative.

Specifically, the Corporations Act prohibits:


  • AFS licensees and their representatives (including authorised representatives) from accepting conflicted remuneration;
  • product issuers and sellers from giving conflicted remuneration to AFS licensees and their representatives; and
  • employers from giving their AFS licensee or representative employees conflicted remuneration for work they carry out as an employee,

(together, the prohibition on Conflicted Remuneration).

Sub regulation 7.7A.12B (1) of the Corporations Regulation 2012 (No 10) provides that a monetary benefit is not Conflicted Remuneration:


  • if the benefit is given to an AFS licensee by or on behalf of an entity in relation to the person dealing in a financial product issued by the entity, on behalf of a client; or
  • if the benefit is given to a person by or on behalf of an entity for dealing in a financial product issued by the entity, on behalf of a client;
  • and the person gives the benefit, directly or indirectly, to a representative of the provider,

(the Stamping Fee Exemption).

The Stamping Fee Exemption does not apply if the entity is an “investment entity”, being an entity which provides a return to its shareholders (or members) mainly from either an investment in financial products or in owning real property (other than for the purposes of developing the property), but does not include an infrastructure entity.

The effect is that investment entities (including REITs) have been prohibited from paying stamping fees to brokers for capital raising since the provisions came into effect on 1 July 2013.

This has caused issues for the traditional distribution models used for IPOs of REITs and we have seen models developed which ultimately are not conducive to encouraging retail participation.

Proposed Amendments To The Draft Regulations

On 29 January 2014, the Government released the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 and Corporations Amendment (Streamlining of Future of Financial Advice) Regulation 2014 to remedy problems with the FoFA laws.

The proposed reforms are designed to reduce the burden on industry and pressures on the cost of advice to consumers. Key amendments include:


  • removing the opt-in requirement;
  • streamlining the annual fee disclosure requirements;
  • amending the best interests duty to allow for scaled advice;
  • exempting general advice from conflicted remuneration; and
  • amending grandfathering to allow for adviser movements.

In addition, the Corporations Amendment (Streamlining of Future of Financial Advice) Regulation 2014 proposes amendments that:


  • clarify that the Stamping Fee Exemption does apply to the initial sale or issue of financial products ie. capital raising activities; and
  • broaden the application of the Stamping Fee Exemption to cover investment entities, thereby allowing stamping fees to be paid in relation to capital raising by investment entities including REITs.

Next Steps

The consultation process is short, closing on 19 February 2014.

The Government expects the regulations will be made at the end of March 2014 (so the broader Stamping Fee Exemption would come into effect at that time) and that a Bill will be introduced to Parliament in the 2014 autumn sitting period with passage scheduled for the winter sitting period.


Ashurst Logo


Sarah Dulhunty, Partner, Ashurst
[email protected]

Tanja Maley, Ashurst
[email protected]


Ashurst Capital Markets Practice Profile in Australia


Homegrown Capital Markets Law Firms in Australia


Comments are closed.